When Participating on a Foreclosure Auction

When a property has passed from being a “delinquent property” to a “pre-foreclosure property” this means the lending company has already initiated the process asking a judge to award them ownership of the property. Therefore, it can be sold to a higher bidder in the search of recovering as much of the original loan and all additional spent money.

Once this happens, the lending company will place the property up for auction. Naturally, as with any other auction it is very important that this one has enough public to rise the initial cost of the property so that the lending company will be able to recover their money.

In order to do so, they will place announcements of it at least in one local newspaper, this action is also required by law, so it is a common occurrence that the local and state government offices have knowledge of such acts and they will disclose the information to who requires it.

This is the way to go when you want to find the right property to buy, especially once you have realized that buying a foreclosed property is not only a good idea but a profitable one. Once the decision has been made on the type of property and, more importantly, on which property to buy, the next step is to see the property and make sure that it is in an adequate condition to be lived in.

See if there is any need for repairing or altering as well as to get some degree of sense on the neighborhood in which the property is located. While most of the times the lending company will not allow you to see or inspect the REO property, this can be done by interviewing the neighbors, sometimes asking the current resident of the property who may or might not be the homeowner from which the property has been taken or even peeking through the windows.

Once you have decided the property you saw is the property you want to buy. The next step is to make a thorough research on the rules and regulations that your state or locality has on real estate auctions; this is an important step because even though there are federal regulations, some changes can be applied from state to state and from city to city. If you are not sure about the regulations, it might be a good idea to consult or hire a real estate lawyer.

Just as you revise on the legal grounds for the auction, make a strong note to review the current market value of the property and be prepared to back down if the property climbs in the auction over that value. Before the day of the auction and even on that same day, make a quick check on the cancellation notices or even make a call to the lending company to see if the current homeowner was able to stop or halt the foreclosure auction from happening.

To prevent yourself from getting caught with the excitement of the moment or the “benefits” advertised of the property in the auction itself, take only the top amount that you are willing to pay either in a personal check, a cashier’s check or even written down on a piece of paper and be strong about it. It is easy to get involved in such a way that you will not measure and overbid.

Original: When Participating on a Foreclosure Auction